Mines shut as South Africa faces electricity 'emergency'

South Africa's power crisis today forced the world's three largest gold mining companies to shut down their operations as the government called the rolling blackouts across the country a "national emergency" and threatened to ration electricity.

In an unprecedented move, the state power utility, Eskom, ordered the mining houses - AngloGold Ashanti, Gold Fields and Harmony - to evacuate all underground staff and cease mining in order to cut electricity consumption to "minimal levels".

The world's largest gold mine, Driefontein near Carletonville with 16,000 workers, was among those closed. The two biggest platinum mining companies, which together account for more than half the global supply, were also forced to cease production, helping to drive up precious metal prices within minutes.

Gold rose above $920 an ounce on the news of the closures while platinum hit $1,690 an ounce, up more than 5%.

South Africa endured the worst day of what is called "load shedding" by Eskom yesterday, with millions of homes left without power for hours at a time and businesses crippled. On Tuesday, hundreds of tourists were trapped for hours on Cape Town's Table Mountain, and scores more stuck in cable cars half way to the mountain top, by a power cut.

Eskom has warned that the mine closures could last for up to six weeks as it will only be supplying power at "survival level". It predicts that regular blackouts will continue for five years or more until new power stations are built and is considering introducing electricity rationing for private households.

Gold mining is a mainstay of the South African economy and employs hundreds of thousands of people. The public enterprises minister, Alec Erwin, today announced a series of measures to deal with the problem, including threatening ration power and to invoke emergency powers to limit coal exports and guarantee supplies to South African power stations.

"The unprecedented unplanned power outages must now be treated as a national electricity emergency situation that has to be addressed with urgent, vigorous and coordinated actions," Erwin said. "We are viewing the next two years as being critical."

But he said he did not expect the crisis to disrupt the 2010 World Cup finals in South Africa.

Erwin said the focus would be on reducing demand through large price increases and penalties to discourage consumption. Eskom is urging South Africans to cut electricity consumption by 20% or face rationing enforced by fines and disconnection as a punishment for exceeding set limits.

The government said today it will convert every traffic light in the country to solar power to end the huge traffic jams caused by the electricity cuts, and restrict the manufacture of high consumption incandescent light bulbs.

The government has blamed the power shortages on increased demand caused by years of economic growth and the provision of electricity to black townships that were not connected in the apartheid era.

But it has also admitted that it failed to heed a warning from Eskom 10 years ago that without new power stations the company might not be able to meet demand for electricity by 2007.

The situation has been compounded by high demand for coal across the globe creating shortages in South Africa.

The mining houses said they are only using power for essential work such as pumping water out of the mines and that the closures will have a "serious effect" on their operations and threaten jobs.

"They issued us with a warning that we should only do emergency work, so we can't take a chance sending our people underground," said the chief executive of Harmony mines, Graham Briggs.

The National Union of Mineworkers on Friday said work in the mines had become "a matter of life and death".

"The mining industry cannot afford random shedding with no prior notice as that endangers the lives of ordinary workers and threatens their very survival," said the NUM general secretary, Frans Baleni.